Hungary – government submits draft 2019 budget to parliament

Finance minister Mihaly Varga submitted the draft 2019 budget to the parliament, the finance ministry announced on the government’s official web portal. The draft budget targets 1.8% of GDP budget deficit and is based on projected GDP growth of 4.1% and consumer inflation of 2.7%. The operating budget will be balanced and the deficit will be generated only by investment and development spending, Varga stressed. He noted that the fundamentals of domestic growth were solid but there were signs of crisis in the eurozone, which required increased budgetary reserves.

Financial and economic stability should be preserved and Hungary’s security should be ensured with adequate border protection and fight against illegal migration, Varga said at the ceremony. Besides security, the budget targets measures to achieve full employment, support families and maintain economic growth, he stated. Government debt is also expected to decline to 70.3% of GDP, down from expected 72.9% at end-2018.

Varga confirmed the main fiscal policy measures for next year as increasing the family tax allowance for two children, reducing the social contribution rate by 2pps to 17.5% and allocating HUF 242bn for the housing construction programme. The principle of pension indexation and pensioner bonuses for above-3% economic growth will be kept next year, the minister said. In addition, the government will make the wages of working retirees free of social contributions in order to stimulate the employment of pensioners. The draft budget also has some room for wage hikes in the public administration sector but the government will decide on the way and the extent of the hikes in the autumn, Varga said.

The parliament will start discussions on the draft 2019 budget on Jun 27, parliamentary speaker Laszlo Kover said. The final voting will be scheduled for Jul 20.

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